Thompson v Lee County, (02-711) 04/01/2003

NO. COA02-711

NORTH CAROLINA COURT OF APPEALS

Filed: 1 April 2003

ALEX H. THOMPSON and
wife, SHELIA THOMPSON,
Plaintiffs,

v .                         Lee County
                            No. 98 CVS 371
LEE COUNTY,
    Defendant,
    Third-Party Plaintiff,

MICHAEL S. WATERS, d/b/a
WATERHOUSE REALTY &
CONSTRUCTION,
Third-Party Defendant.

Appeal by plaintiffs from judgment entered 13 February 2002 by Judge Wiley F. Bowen in Lee County Superior Court. Heard in the Court of Appeals 12 March 2003.

Bruce T. Cunningham, Jr. for plaintiffs.

Womble Carlyle Sandridge & Rice, PLLC, by Mark A. Davis, for defendant Lee County.

TYSON, Judge.

Alex H. Thompson and wife, Shelia, (“plaintiffs”) appeal from an order that denied their motion for a continuance and granted Lee County's motion for summary judgment on the grounds of sovereign immunity. We affirm.

    Plaintiffs sought compensatory and punitive damages against Michael S. Waters (“Waters”) for alleged negligent construction ofplaintiffs' home and claimed negligence by Lee County's building inspectors for permitting violations of the building code to occur during the construction of the home. Plaintiffs alleged that a special relationship arose between them and Lee County: (1) upon payment of permit fees for inspections during construction and (2) by the county's implied representation that its inspectors were competent to inspect the residence and prevent building code violations. Lee County moved for and was granted dismissal of plaintiffs' claims against it pursuant to Rule 12(b)(6) of the North Carolina Rules of Civil Procedure based on the public duty doctrine.
    This Court affirmed the order of the trial court in an unpublished opinion. Plaintiffs moved for and were granted a petition for discretionary review by the N.C. Supreme Court. Our Supreme Court held that “the public duty doctrine does not bar this claim against Lee County for negligent inspection of plaintiffs' private residence.” Thompson v. Waters, 351 N.C. 462, 465, 526 S.E.2d 650, 652 (2000).
    On 15 August 2000, Lee County filed its answer which alleged, inter alia, the affirmative defense of sovereign immunity and asserted a third-party claim against Waters. On 24 January 2002, Lee County filed a motion for summary judgment based on sovereign immunity, claiming the county's liability insurance policy does not provide coverage. Plaintiffs filed a response to Lee County's motion and requested a continuance to conduct discovery on the issue of sovereign immunity.    The trial court granted Lee County's motion for summary judgment on 4 February 2002, holding that the county did not waive sovereign immunity by the purchase of a liability insurance policy which provided coverage.

    Plaintiffs contend they needed additional time for discovery concerning representations made by defendant during May of 1997. On 1 May 1997, plaintiffs received a letter from Glenn LeGrande “Field Claims Representative Claims Management Services,” stating that he was “the claims adjuster representing Lee County and the Inspections Department.” In a later letter dated 19 May 1997, LeGrande, as “claims adjuster”, again wrote to plaintiffs and stated “that we remain firm in our position that the county inspections department was not responsible for the problems occurring at the Thompson residence after construction was completed.” Plaintiffs contend that neither letter “by the insurance adjuster” mentioned the lack of insurance coverage. Plaintiffs argued that the trial court abused its discretion in denying their motion for continuance in order for plaintiffs to respond to Lee County's allegations of no liability insurancecoverage.
    The trial court is vested with discretion to grant or deny a motion for a continuance. Baker Indus., Inc. v. Gould, 146 N.C. App. 561, 563, 553 S.E.2d 227, 229 (2001). This Court will not overturn the trial court's decision to deny a motion to continue unless it is shown the court abused its discretion. Id.
    Contrary to plaintiffs' assertions, plaintiffs were informed as early as May 1997 in the letter from LeGrande that Lee County would assert a defense of immunity. Lee County also asserted “sovereign immunity” as its “fourth defense” in its answer filed on 15 August 2000. Lee County filed its motion for summary judgment based on sovereign immunity on 24 January 2002, almost a year and a half after filing its answer. The hearing on summary judgment was heard on 4 February 2002. Plaintiffs have not shown that the trial court abused its discretion in denying plaintiffs' motion for a continuance.

    Plaintiffs contend genuine issues of material fact bar granting summary judgment for defendant. Plaintiffs argued that the doctrine of laches barred Lee County's assertion of sovereign immunity. Plaintiffs assert that material questions of fact remain to determine whether Lee County reasonably delayed asserting sovereign immunity. Plaintiffs also assert that the trial court should have granted partial summary judgment for plaintiffs and held the doctrine of laches precluded the defense of sovereign immunity.    Presuming without deciding that the doctrine of laches applies to the waiver of sovereign immunity, plaintiffs failed to present a forecast of any evidence to support laches. Plaintiffs must show that (1) Lee County negligently failed to assert an enforceable right within a reasonable period of time and (2) plaintiffs were prejudiced by the delay in asserting the right, to rely on the doctrine of laches. Costin v. Shell, 53 N.C. App. 117, 120, 280 S.E.2d 42, 44, disc. rev. denied, 304 N.C. 193, 285 S.E.2d 97 (1981).
    Plaintiffs contend prejudice by Lee County's failure to assert the lack of liability insurance prior to the submission of interrogatories and the taking of depositions of the building inspectors. Lee County first alleged the defense of sovereign immunity in its brief in support of its motion to dismiss on 29 June 1998, asserting plaintiffs failed to allege waiver of sovereign immunity. Although not addressed by the Court of Appeals in the earlier appeal, Lee County asserted the issue of “Whether Appellant's negligence claim against Lee County is barred by the doctrine of sovereign immunity” in its response to plaintiffs' petition for discretionary review to our Supreme Court. Plaintiffs presented evidence, denied by Lee County, that the county had “acknowledged that the Plaintiffs had alleged the purchase of liability insurance in their response to the Motion to Dismiss, and therefore, the Defendant Lee County would not be seeking to dismiss the Complaint based on a failure to allege waiver of sovereign immunity.” Failure to allege waiver of sovereign immunity was notan issue submitted to the Supreme Court. Although not actually alleged in the complaint, plaintiffs filed an affidavit on 24 June 1998 verifying the complaint and stated “I believe and allege that Lee County had in effect at the time that my home was being constructed a policy of liability insurance providing liability coverage to the county inspection department.”
    After our Supreme Court's decision, Lee County filed its answer which included the affirmative defense of sovereign immunity. Plaintiffs were given notice of Lee County's assertion of the defense of sovereign immunity prior to the issuance of any interrogatories or taking of any depositions. Plaintiffs failed to present evidence that laches entitles them to partial summary judgment.

    Plaintiffs contend that building inspectors are lawenforcement officers because they have the power and authority to enforce the building code through criminal process. We disagree.
    The policy defines “Law Enforcement Employees” and divides them into three classes. Class A employees are “those armed employees who deal directly with the public and exercise general powers of arrest.” Class B employees are “those employees, armed or unarmed, who do not deal directly with the public or only exercise limited power of arrest under the direct supervision of a certified officer; or those employees who do not exercise power of arrest and whose duties are only administrative in nature.” Class C employees are “those employees whose ordinary duties are only indirectly related to the enforcement of criminal laws.”
    Plaintiffs contend building inspectors are covered within Class C by virtue of N.C. Gen. Stat. § 153A-350 et seq. These statutes set forth the duties and powers of building inspectors to enforce the building code. Building inspectors inspect buildings to determine compliance with code standards. Inspectors have the power to condemn buildings or to issue stop work orders. However, they may not place into custody nor arrest anyone.
    The policy provides examples of Class C employees: “includes but is not limited to” “Clerical Staff/Fingerprinting/License Examination . . . Stenographic Personnel/Food Service/Photographic . . . Dispatcher/Record Keeping Duties.” Building inspectors are not specifically enumerated in the description and do not perform duties similar in nature to those listed to bring them within the class.    Further, the Supreme Court previously held that the building inspectors here are not law enforcement officers. In deciding the issue of public duty doctrine, the Supreme Court stated “This Court has not heretofore applied the public duty doctrine to a claim against a municipality or county in a situation involving any group or individual other than law enforcement.” Thompson, 351 N.C. at 465, 526 S.E.2d at 652. The Court then went on to hold that the public duty doctrine does not apply to this case. Id. We hold that Coverage A for law enforcement employees of the self-insurance pool policy is inapplicable to building inspectors.

    Plaintiffs contend that if their claim is not included under the law enforcement coverage, it is included within Coverage B for public officials. Coverage B provides:
        The Fund will pay on behalf of the Participant/Covered Person(s) all sums which the Participant/Covered Person(s) shall become legally obligated to pay as money damages because of any civil claim or claims made against the Participant/Covered Person(s) arising out of any Wrongful Act of any Covered Person(s) acting in their capacity as a Covered Person(s) of the Participant named in the Declarations and caused by the Covered Person(s) while acting in their regular course of duty.

The policy explicitly excludes any claim “for loss, damage to or destruction of any tangible property or the loss of use thereof by reason of the foregoing[.]”
    Plaintiffs contend that damage to their property was committed by the builder Mike Waters. Further, they allege Waters' negligent conduct was due to the negligence of the inspector.    To recover on a negligence claim, plaintiffs must show a legal duty, breach of that duty, and injury proximately resulting from the breach. Tise v. Yates Construction Co., 345 N.C. 456, 460, 480 S.E.2d 677, 680 (1997). Although plaintiffs claim breach of a duty to inspect, the alleged injury from the alleged breach was damage to plaintiffs' building. We hold that plaintiffs' claim is “for loss, damage to or destruction of any tangible property” and is excluded from coverage under Lee County's Self-Insurance Pool policy.